Join Date: Feb 2001
Location: The Hills of North Georgia,USA
US:Ford luxury brands eyed by J.P. Morgan fund
Ford luxury brands eyed by J.P. Morgan fund
NEW YORK -- A private equity arm of JPMorgan Chase & Co. is eyeing some of Ford Motor Co.'s luxury brands, a source familiar with the matter said on Friday, the latest sign the struggling carmaker is looking to unload assets as part of a turnaround bid.
Ford has hired a veteran banker to explore strategic options at the No. 2 U.S. automaker, which is under pressure to speed up cost-cutting efforts after losing $1.4 billion so far this year.
Adding to the deal speculation surrounding the company, Ford said on Friday that Robert Rubin, a member of Citigroup Inc.'s Office of the Chairman and a former U.S. Treasury secretary, has resigned from Ford's board of directors, citing the potential for an appearance of a conflict of interest.
The strategic review will almost certainly bring Ford in touch with bankers and private equity groups.
Former Ford CEO Jacques Nasser is a partner at the JPMorgan private equity group, One Equity Partners LLC. The source said the group is interested in parts of Ford's Premier Auto Group, adding that the talks are at a very early stage.
The Premier Auto Group includes the Jaguar, Land Rover, Volvo and Aston Martin brands. A source told the Bloomberg news service that the talks are focusing on Jaguar and Land Rover.
One Equity Partners declined comment on the matter. A Ford spokesman said, "We do not comment on speculation."
The J.P. Morgan group is the second reported to be interested in Ford's luxury brands in recent days. On Thursday, British construction machinery group JCB said it was interested in buying Jaguar.
The J.P. Morgan news helped push Ford shares up 3.2 percent to $8, but credit analyst Philip Watkins of Commerzbank in London said Ford needs to do a lot more than sell certain brands to boost its performance.
"The first thing they should focus on is their buybacks, and then focus on selling a stake in (Ford's financing arm) Ford Credit," Watkins said.
"You're tinkering if you're selling off brands," he added. "It's fine, but I don't think you're going to raise much money for any of these businesses. It's not going to solve their problems, which is to sell more cars."
General Motors, the world's largest automaker, sold a 51 percent stake in its financing arm in April in a deal worth $14 billion.
Watkins pointed out that, unlike GM's financing arm, which offered mortgage lending and other services, Ford Credit finances only autos. A 51 percent stake in Ford Credit would be worth about $6 billion, according to the analyst.
Nasser, who created the luxury brands group while he was Ford CEO, was ousted in October 2001 amid mounting troubles at the automaker. His departure came shortly after Ford reported a $692 million third-quarter loss on top of a loss in the previous quarter.
He joined One Equity Partners in 2002, according to the company's Web site.
My first car was a 67 Mustang Coupe, 2nd one was a 67 Cougar XR-7, 3rd one was a 66 Mustang Coupe. Why did I get rid of these cars for ? I know why, because I'm stupid, stupid, stupid.
My next Ford.....